The Big Three in BIG trouble!

This is the story about greed. Greed done the way a good business knows how, greed done the way a free society allows, and greed done the way that only Americans can do it. Here is the way of the American Big Three.

General Motors, Ford and Chrysler, make most of their profits by selling big cars and trucks of any sort. Big cars and any truck takes nearly the same amount of raw materials as a regular or compact car, and roughly the same amount of time in labor to build them. But bigger means a bigger price, and profits go up accordingly. And with the government imposed truck tariff of 25% on imports, American truck makers are virtually guaranteed a sale on their trucks because with the added import tax on anything foreign, they are less expensive. That’s the greed part of this story, why fix something if it aint broke!

As you can see, it automatically becomes more profitable to make bigger vehicles, particularly trucks, because the Big Three make more money. However, as gasoline prices began to rise worldwide, do you think anyone was paying particular attention to the handwriting on the wall?

Apparently not, because even from 2006 when sales for cars were off in the 20 and 30 percentile range, truck sales were even more dismal, in the 30 to 40 percentile range! And remember, this was from 2006!

Was nobody paying attention, or what? Trucks and big cars get lousy gas mileage, HELLO, and gas prices were near record highs. Well, I hate to be redundant about this but, if you ask now in 2008 if any of the Big Three have been paying attention, you get the same answer as last time, apparently not!

As of October 1st, sales were down for the Big Three for the year to the tune of, 17% for GM, 33% for Chrysler and 34% at Ford. Those were the last figures released, and in November, with sales falling still further, the Big Three lobbied for a government bail out of 10s of billions of dollars, so that none of them would have to declare bankruptcy, and destroy over 3 million auto related jobs in the industry.

Of course, before this steep decline, the American auto industry was in good shape. They were making huge profits, as all good businesses should, but instead of reading what was written on the wall and invested in fuel efficient vehicle research and development, they chose to ‘stay the course’ and kept producing gas guzzling cars and trucks. Let’s see, where did that get them?

This is not to say that the design teams haven’t been busy to some extent. In fact, the GM and Chrysler folks have actually unveiled revolutionary electric car prototypes that need only a couple more years to work the bugs out before they can go into production. These are totally practical electrical green vehicles capable of long running times and high top speeds. Suffice it to say, that if they make it to market, they will be a revolution in car production of any sort. And that’s how forward thinking American auto companies can be.

Until then though, and maybe until the bailout, it’s been the same old same old. I have been watching ads for GM giant pick ups, SUVs and huge gas guzzler cars, all getting in the area of 20 miles per gallon. Ditto on Ford and Chrysler, with nary a fuel efficient car in the mix.

You would think that by now, even with the bail out on the table, with sales down dramatically, and nearing bankruptcy, they would see the writing on the wall. Well, apparently not.

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